Facilitating adviser charges

The process of facilitating your adviser charge should be as simple and straightforward as possible. The facilitation agreement sets out the terms under which we we’ll facilitate a charge on behalf of your client. This includes the payment of the charge and, most importantly, that if your client cancels or stops the payment of the charge they may still be liable to pay the charge to you under the terms of your agreement with them.

However, the facilitation agreement is not a replacement for any adviser charging agreement you have with your client.

How to use our facilitation agreement

In order to facilitate your adviser charge from your client we’ll need them to read and complete the facilitation agreement. It’s important that your client signs both the facilitation agreement and the application form declaration, and the monetary amount or percentage in the facilitation agreement matches the details in the client's quotation.

What elements of the adviser charge can be facilitated?

HMRC has issued guidance as to what is and what is not acceptable in terms of an adviser charge facilitated through an annuity. In accordance with these guidelines, the following elements of your adviser charge can be facilitated:

  • Advice in relation to the client exercising the in-house lifetime annuity option/open market option.
  • Advice about the type of lifetime annuity.
  • Advice concerning from whom the lifetime annuity should be bought.
  • Wider pension advice culminating in the decision to purchase a specific lifetime annuity, such as how to maximise income from the pension fund at retirement or how to maximise the return on an existing pre-retirement pension fund or more general advice on the payment outcomes/risks of choosing the type of pension to be taken; scheme pension, lifetime annuity or drawdown pension.

However, an adviser charge being facilitated from our annuity cannot cross-subsidise other advice, such as advice about the investment of other pension funds that are being left in force and not being considered as part of the member’s pensions options. The advice must relate directly to the pensions options of the member and the member’s retirement fund.

You are responsible for ensuring that charges are facilitated in accordance with HMRC guidance in this area.

How we will validate your adviser charge

RDR rules require providers to validate client instructions on adviser charging, which we will do by way of 'wet signatures' obtained on the facilitation agreement and application form. In a few circumstances we may need to ask you and your client for an updated facilitation agreement. We have introduced a standalone facilitation agreement form for use in situations such as:

  • In the event of any increase to the amount of your adviser charge during the application process, this must be confirmed in writing by the client by completing a new facilitation agreement
  • If we receive instructions directly from the client to make a change to the adviser charge, we will send them a new facilitation agreement to complete and we will let you know what's happening
  • If we require a change to the facilitation agreement from the client, we will request this from you and we'll explain why this is needed
  • If a facilitation agreement isn't received with the application form then we will issue a form to you with the acknowledgement letter
  • If we receive a new source that we were not made aware of on the original application form we will need your client to complete a new application form and facilitation agreement
  • If a fixed monetary fee is spread across less fund sources than originally applied for we will need your client to complete a new facilitation agreement.

In some instances we won't require a new facilitation agreement to be completed. These include:

  • If the charge reduces we won't ask your client to complete a new facilitation agreement.
  • If an additional source is mentioned in the original application, a new facilitation agreement won't be needed.
  • If the charge is percentage based and less source funds than originally applied for are received.